Monday, November 23, 2009

Dell's weak quarter (DELL)

Getting to this a bit late. 

Dell (DELL) stock tanked Friday after a Thursday afternoon earnings release demonstrated a VERY weak quarter.  Revenues were off more than expected, and earnings came in well below anticipated levels, as margins were quite weak and market share slipped.  People were especially caught off guard, as other tech names had reported significant earnings "beats."

Dell claims to have earned $3.4billion in "operating cash flow," a number that I don't take to be very sustainable.  I'll continue to use conservative numbers in my estimates for Free Cash Flow.

Speaking of Free Cash Flow, estimates have not changed much for this and next year.  What HAS changed is the stock price.  Thanks to the selloff, the Free Cash Flow Yield (FCFY%) has gone from 11.5% to 13% in just a couple days, making the shares more attractive.

Copyright 2009 AlphaNinja

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